💥Lender on Lender Violence is Back! And on Steroids. Part II.💥
GenesisCare, Platinum Equity Partners, Plastique, Some Updated BK Stats + More
On June 1, 2023, TX-based Wesco Aircraft Holdings Inc. (Incora) and forty-three affiliates (collectively, the “debtors”) filed chapter 11 cases in the Southern District of Texas (Judge Jones) — the latest entry in the seemingly never-ending multi-chapter creditor-on-creditor violence saga that has already featured a vast and sordid cast of super characters (e.g., Revlon Inc., Serta, etc.) across the multiverse (SDTX, SDNY).1 Incora is one of the lesser known figures in this not-at-all-cinematic-universe but its story is sure to be action-packed nonetheless. Why? Because it involves a bunch of pissed off investors! What else is new?!
Before we go there, a brief bit about the debtors’ actual business: it is, unlike a lot of the recent dumpster fires to descend into bankruptcy of late, real. With over 3750 employees, 8400 customers, 7000 suppliers, $1b in inventory and 600k active SKUs, Incora provides distribution and supply chain management solutions to a range of industries — primarily aerospace. Primarily via contract (but sometimes on demand), Incora supplies either hardware or chemicals from the likes of Honeywell Inc. ($HON) and 3M Co. ($MMM) to key customers like Lockheed Martin Corp. ($LMT), Boeing Inc. ($BA), Raytheon Technologies Corp. ($RTX) and more. If you’re looking at those names and wondering whether Incora is important to the defense industry, wonder no more: it is.
Which is why, to some degree, it’s actually kind of crazy that it is private-equity owned. Incora as it stands today is a merger by Platinum Equity Partners (“PEP”) between two of its portfolio companies, Wesco and Pattonair. PEP closed on its purchase of Wesco (from another PE firm) in January ‘20 and announced the new combined name, Incora, in March ‘20. Just in time for a global pandemic to ravage the aerospace industry and completely decimate any and all hopes of near-term synergy realization.
With the pandemic upsetting things, Incora began exploring ways to address its beast of a cap stack. We’re talking:
$420mm ABL Revolver;
$637mm ‘24 notes; and
$882mm ‘26 notes.
And that’s just the secured debt. Below that there was another $525mm of ‘27 unsecured notes, a $15mm unsecured promissory note from PEP and $128mm in structurally subordinated ‘28 senior PIK notes. With this debt load and performance sh*tting the bed…
…folks had to start getting creative.
This is where the fun starts. Let’s dig in ⬇️.